“You have to spend money to make money.” It’s a phrase you’ve probably heard more times than you can count. Whether you’re running a business, investing, or even starting a side hustle, the idea seems baked into how success is achieved. But is it always true? The short answer: not necessarily. While spending wisely can unlock opportunities, blindly throwing money at a problem often leads to waste. In this post, we’ll break down what this saying really means, explore when it makes sense to invest, and when it might be smarter to hold back.

The Origins of ‘Spend Money to Make Money’

Few phrases have endured the test of time like “You have to spend money to make money.” It’s a mindset ingrained in commerce, entrepreneurship, and growth strategies, but its origins stretch far beyond modern capitalism. To understand its journey, we must look both to history and how its meaning has evolved in today’s world.

Historical Perspective: Titus Maccius Plautus’s Role

The roots of this famous phrase date back to ancient Rome, where playwright Titus Maccius Plautus first expressed the idea in his comedic works. Plautus lived from 254 to 184 BCE and was renowned for adapting Greek comedies for Roman audiences. His use of satire and witty dialogue reflected societal norms, particularly about money and power.

In his play Asinaria—sometimes translated as The Comedy of Asses—he includes the line, “You must spend money to make money.” The context? A character justifies the costs necessary to achieve their goals, a sentiment that resonated with the economic realities of Roman society. For a world dominated by trade, wealth, and constant expansion, the phrase made perfect sense. Investing resources was critical for survival and success, especially when competition was fierce.

Over centuries, this concept transcended Plautine comedy. It became a principle referenced repeatedly across cultures and economies, gaining traction during the Industrial Revolution. Entrepreneurs and economists alike echoed the idea, asserting that risk and financial outlay were essential elements of generating wealth. While Plautus wasn’t an economist, his insight on human habits with money continues to influence us today.

Modern Implications

Fast forward to today, and the phrase has become almost a mantra in entrepreneurial circles and beyond. It’s heavily linked to how businesses scale and sustain themselves. Want to grow a startup? You’ll need to hire talent, invest in tools, and pour money into marketing. Need a larger audience? Spending on paid advertising might be inevitable. Even everyday individuals applying this idea in their side hustles can see the logic in spending a little to achieve bigger rewards.

For many businesses, areas like advertising, research and development, and infrastructure demand upfront investment. For example:

• Advertising costs: Paying for visibility through social media ads, Google campaigns, or traditional forms of media often leads to significant growth if done strategically.
• Operational tools: Software, physical equipment, or processes require funding, particularly when streamlining performance or scaling efforts.
• Talent acquisition: Hiring experts or building teams inherently costs money but can drastically improve productivity and innovation.

However, this principle has its limits. Modern critics argue that blindly following this mindset can lead to poor financial decisions. For every wise investment, reckless spending without strategy can sink businesses or personal ventures. The rise of digital tools like lean startups or bootstrapped businesses challenge the idea that spending is always necessary. Instead, spending should be viewed as a tool—one of many—that facilitates opportunities instead of being the only path forward.

This balance keeps the phrase relevant, even today. Whether it’s using Plautus’s timeless wit or applying it to spreadsheets and business strategy meetings, the message remains clear: Investing wisely is essential, but knowing when and where to spend is what makes all the difference.

When Spending Money is Necessary for Growth

Spending money can often feel like a risk, especially when resources are tight. However, there are specific scenarios where opening up your wallet isn’t just helpful—it’s essential. Strategic investments in key areas are what help businesses and individuals unlock growth, stay competitive, and achieve long-term sustainability. Let’s explore three critical areas where spending money is necessary to see meaningful returns.

Marketing and Advertising

Marketing and advertising are the lifeblood of growth for many businesses. If people don’t know you exist, how can you expect them to buy what you’re selling? That’s where investing a portion of your budget in advertising becomes non-negotiable.

Consider this: businesses that allocate at least 5-10% of their revenue to marketing efforts tend to grow faster. Why? Because spending on ads creates visibility and trust. For instance, a well-targeted Facebook or Google ad campaign can generate high-quality leads who are already interested in your offering. Shopify reports that some e-commerce brands experience up to a 4x return on investment (ROI) from paid search ads alone.

Key spending areas include:

• Social media ads: Platforms like Instagram, TikTok, or LinkedIn provide access to highly targeted audiences for relatively low costs.
• Content marketing: Creating blogs, videos, or podcasts helps build authority. Promoting that content through paid channels maximizes its reach.
• Retargeting ads: Ever noticed an ad for a product you viewed online? Retargeting keeps you top of mind for potential customers, increasing conversion likelihood.

Spending money on ads isn’t just throwing cash around—done right, it’s about making money work for you.

Investing in People

No matter how advanced your tools or shiny your marketing campaigns, your team is what drives success. Smart businesses understand this and prioritize investing in their people through training, resources, and retention incentives.

Imagine hiring a great salesperson but not providing them with updated tools or proper onboarding. They may never hit their full potential. In contrast, companies that spend time and resources on training, offering growth opportunities or competitive perks, see significantly higher employee productivity and retention. According to Gallup, businesses with highly engaged employees outperform their competition by 23% in profitability.

Ways to invest in your team include:

• Training programs: Conferences, certifications, or skill-building workshops increase expertise and confidence.
• Resources and tools: Provide the right technology or software to streamline workflows and eliminate unnecessary frustration.
• Retention strategies: Offering benefits like flexible schedules, health perks, or professional development budgets not only helps retain talent but attracts the best candidates.

The expense of developing your team far outweighs the cost of turnover or inefficiency.

Product Development

You could have the world’s best marketing strategy and an all-star team, but if your product doesn’t deliver, none of that matters. Consistently investing in product innovation, research, and equipment is crucial to staying relevant and competitive.

Take Tesla as an example. Its commitment to extensive research and development (R&D) has allowed it to dominate the electric vehicle market. In 2022 alone, Tesla spent nearly $3 billion on R&D, focusing on battery technology and autonomous driving.

Smaller businesses might not have billions to spend, but focusing your budget on areas like:

• Improved design: Enhancing usability or aesthetics can position your product as premium.
• Quality testing: Ensuring reliability boosts customer trust and reduces refund requests.
• New features: Listening to customer feedback and adding features keeps users engaged.

Even behind-the-scenes upgrades, like purchasing better manufacturing equipment or streamlining logistics, can dramatically improve customer satisfaction and profit margins.

By viewing spending as a tool, especially in these core areas, you’re not just parting with money—you’re planting seeds for future growth. Each dollar invested strategically can help your business gain traction, outperform competitors, and ultimately generate lasting success.

The Fine Line Between Spending and Wasteful Expenditures

Striking the right balance between spending and being wasteful is a challenge many face in both personal finances and business. Spending money itself isn’t the problem; it’s how and why you’re spending that matters. Smart spending should create value, while wasteful expenditures drain resources without meaningful results. So, how can you tell the difference and make better choices? Let’s unpack this below.

Differentiating Spending from Investment

Not all spending is created equal, and understanding the difference between reckless spending and smart investing is essential. Think of it like planting a garden: if you throw seeds randomly without preparing the soil, you’re wasting resources. But if you take the time to plan, water, and nurture those seeds, they’ll eventually grow into something fruitful.

Spending without thought—like always opting for the latest gadget or jumping into business trends without research—often leads to short-lived satisfaction but no lasting returns. On the other hand, a calculated investment allocates resources toward opportunities that yield measurable benefits. For businesses, this could mean investing in tools that improve efficiency or marketing strategies that drive sustainable sales. For individuals, it might involve spending on skill-building courses or long-term savings plans.

The key? Treat every outgoing dollar as a resource that should work for you, not against you. Ask yourself: Will this spending create an opportunity for growth, or is it just satisfying an immediate desire?

Red Flags of Overspending

Overspending doesn’t always look dramatic; it often creeps up subtly and quietly drains your resources. Recognizing the signs early can prevent significant losses, especially for businesses operating on thin margins. Here are a few common red flags:

• Minimal return on investment (ROI): Spending money but not seeing measurable results—like paying for ads that generate zero leads—is the equivalent of throwing money down the drain.
• Chasing trends without strategy: Constantly purchasing new tools or following industry trends without a clear plan often leads to unused or underutilized resources.
• High fixed costs with low outputs: Routine business expenses, such as office leases or expensive software, may outweigh their contribution to your profit margins.
• Disregard for budgets: If you’re frequently exceeding budgets or using vague spending targets, that’s often a sign of financial mismanagement.
• Transactional mindset: Spending just to “keep up” with others—like buying that expensive piece of equipment just because your competitor did—is unlikely to pay off unless it aligns with your specific goals.

Overspending is like trying to pour water into a leaky bucket. It might not seem bad initially, but over time, those small, wasteful expenditures add up and erode your ability to invest where it really matters.

Issues with Underspending

While overspending is harmful, underspending can be just as detrimental. A reluctance to make necessary investments often comes from fear—fear of failure, fear of risk, or fear of running out of money. But playing it too safe can leave you stagnant in a fast-paced, competitive world.

Here’s how underspending can hurt:

1. Lower competitiveness: Businesses that avoid spending on innovation, new tools, or marketing risk being left behind by competitors who are willing to take calculated financial risks.
2. Missed growth opportunities: Whether it’s skipping courses that improve your skills or ignoring advertising campaigns that could expand your reach, refusing to spend can translate to leaving money on the table.
3. Undermined employee satisfaction: Not investing in staff training, fair wages, or better tools often results in reduced team morale and productivity, which directly impacts profitability.
4. Inefficient systems: Avoiding expenses to update outdated equipment or software may save money in the short term but can slow down productivity and cost more over time.

Think of underspending like trying to water a plant with too little water—it doesn’t die immediately, but it struggles to thrive. Businesses and individuals alike must understand that while saving is essential, an aversion to spending can starve growth and innovation.

Finding the fine line between spending wisely and overspending is all about balance. Spending decisions should be tied to measurable goals, intentionality, and a willingness to adapt based on outcomes. While overspending reaps little reward and underspending leads to missed opportunities, smart investments are what set the stage for long-term success.

Building a Strategic Spending Plan

Creating a strategic spending plan is more than just tracking where your money goes—it’s about ensuring every dollar serves a purpose. Whether you’re running a business or managing personal finances, having a clear strategy helps you focus on priorities, make smarter investments, and reach your goals faster. Let’s break it down into actionable steps.

Assessing Your Budget

Before making any financial commitments, you need to know exactly where you stand. A great strategy starts with clarity about your current resources and spending habits.

Here’s how to evaluate your budget effectively:

1. List all income sources: Include every dollar you make—whether it’s from salary, side hustles, or passive income streams.
2. Track your expenses: Use apps or spreadsheets to categorize your spending. Focus on recurring costs (like rent, subscriptions) and variable expenses (like dining out or equipment purchases).
3. Identify opportunities to cut costs: Look for areas where you’re overspending or where value isn’t being maximized. Could you negotiate with suppliers? Cancel unused subscriptions?
4. Understand fixed vs. flexible expenses: Fixed ones are essential, like rent or baseline employee wages, while flexible ones (like marketing) can better adapt to changing goals.

A detailed overview of your financial situation helps you spot trends. If your business allocates 40% of revenue to overhead but sees no growth, it might be time to rethink that allocation.

Setting Measurable Goals

Once your budget is clear, the next step is defining what financial success looks like. Without specific goals, spending can feel aimless.

Follow these steps to create measurable financial goals:

• Define your objectives: Are you looking to boost revenue, expand market share, or reduce debt? Be clear and concise.
• Set spending benchmarks: Assign precise budgets for each initiative. For example, allocate $5,000 for a marketing campaign or $10,000 toward a new product prototype.
• Use SMART goals: Ensure your targets are Specific, Measurable, Achievable, Relevant, and Time-bound. For example, “Increase leads through advertising by 20% in Q3” is a concrete goal.
• Align investments with priorities: Ensure your spending matches your goals. If customer acquisition is your priority, investing more in marketing might make sense, but spending on employee perks can wait.

A key takeaway? Every dollar should be tied to a purpose. Think of each expense as a ticket to measurable progress.

Tracking ROI

Spending without assessing returns is like walking blindfolded. Whether it’s a business investment or a personal splurge, understanding what you gain from your financial commitments is crucial.

Here’s how you can monitor ROI effectively:

• Track every investment: Keep a log of where you’re putting money and assign metrics to measure success. A simple spreadsheet or finance app can keep this organized.
• Analyze returns regularly: For ongoing spending, evaluate results quarterly or biannually. For instance, is that email marketing software driving higher conversions? Are conference trips yielding valuable partnerships or just draining resources?
• Adjust strategies as needed: If an investment doesn’t deliver expected results, don’t hesitate to revise. Maybe that vendor charging a premium rate isn’t offering better service than a competitor—you could redirect funds elsewhere.
• Diversify spending: Avoid putting all your eggs in one basket. Test multiple approaches to find what works best.

Think of ROI tracking as maintaining a fitness tracker for your finances—you won’t know what’s improving unless you monitor progress. By constantly analyzing results, you ensure your spending supports long-term success.

Strategic spending isn’t just about making smart choices today; it’s about continuously aligning resources with priorities and goals. By taking these steps, you can make your money work as effectively as your best employee.

Case Studies: Spending Smart to Achieve Success

The saying “work smarter, not harder” applies just as well to spending in business. Success isn’t always about throwing piles of cash at problems—it’s about knowing where to invest and what will offer meaningful returns. Let’s explore examples of businesses that struck the right balance between strategic spending and financial caution, and the valuable lessons we can learn along the way.

Startup Success Stories: Spending Wisely on Growth

Some startups have managed to achieve outstanding growth by using their limited budgets strategically. They’ve demonstrated that you don’t need endless funding; you just need to know where to put your money.

• Airbnb: When Airbnb first began, the founders didn’t rely on hefty ad budgets or high-concept marketing campaigns. Instead, they used a lean strategy: focusing on excellent product design and tapping into free platforms. They invested in hosting quality photos to market their listings and used platforms like Craigslist to drive traffic to their website. This low-cost, high-impact approach helped them grow into a global giant without overspending upfront.
• Buffer: Buffer, a social media scheduling platform, used content marketing to establish authority and grow their audience. With a tight budget, the company focused heavily on blogging, sharing in-depth, actionable content about social media strategies. Their early investment in skilled writers and creating free resources yielded significant organic traffic, leading to exponential growth with minimal ad spend.
• TripAdvisor: TripAdvisor is a prime example of how lean marketing can pay off. When launching in 2000, they relied on user-generated content to create an extensive database of travel reviews. Rather than heavily investing in paid media, TripAdvisor focused on building an excellent product and developing word-of-mouth traction. Their thoughtful spending helped establish credibility and gain widespread adoption without a massive budget.

These startups prove that investing strategically in areas like usability, organic marketing, and scalable systems can reap enormous returns. Every dollar served a purpose, making it easier to scale without financial strain.

Lessons from Failures: The High Cost of Overspending

Reckless spending has also been the downfall of many businesses. The allure of spending big in the hopes of achieving faster success can sometimes lead to devastating consequences.

• WeWork: WeWork’s rapid rise and fall serve as one of the clearest examples of overspending gone wrong. Lavish office designs and aggressive expansion drained cash reserves faster than profits could roll in. Their lack of financial discipline, coupled with inflated valuation goals, ultimately led to failed IPO attempts and massive downsizing. The lesson? Spending money without a clear path to profitability is unsustainable, no matter how exciting the vision.
• Pets.com: During the dot-com boom, this online retailer spent heavily on high-profile Super Bowl ads and elaborate marketing campaigns. At the time, their business model didn’t justify the expenses. With razor-thin margins and enormous operational costs, the company burned through its funding and went bankrupt in less than three years. The takeaway? Spending big on marketing before nailing down profitability is a slippery slope.
• Juicero: A good product idea doesn’t always mean it’s market-ready. Juicero’s $700 smart juicer became infamous for its unnecessary costs. They poured large sums into hardware design and production, only to later find consumers could squeeze the juice packets by hand without the machine. The inability to justify their pricing or spending quickly led to their demise. Lesson learned: Always validate demand before over-investing in product development.

These cautionary tales highlight the dangers of blindly throwing resources at perceived growth. Investment should always align with actual value, demand, and a clear strategy for return on investment.

By examining both successes and failures, it’s clear that smart spending—backed by strategy and a clear understanding of goals—wins the race. Businesses that approach finances with a combination of wisdom and restraint are better equipped to thrive in the long run.

10 Smart Examples of Spending Money to Make Money

Sometimes, spending money upfront can unlock opportunities that lead to greater financial returns. The key is to focus on intentional, value-driven spending rather than splurging without purpose. Below are ten smart examples where spending money can help pave the way to making more money in the long run.

1. Taking a course or buying resources to learn more about money management

Investing in financial education is one of the best ways to set yourself up for long-term success. Free resources like blogs and YouTube videos are helpful, but paid courses and in-depth programs often go deeper, providing structured lessons and actionable advice. Whether it’s learning how to budget, invest, or even start a business, these skills can improve your earnings significantly over time.

For example, online platforms like Udemy or Coursera offer courses on everything from mastering stock investments to creating sustainable budgets. Think of it like a domino effect: the more you understand your money, the smarter decisions you’ll make, multiplying returns on every future dollar.

2. Hiring a financial advisor if you get stuck

Feeling stuck or overwhelmed in your financial life? Hiring a professional can help. Financial advisors specialize in creating actionable plans, helping you make the most of your income, investments, and savings. While hiring one may seem like a large expense upfront, the advice they offer often saves or earns you far more in the long run.

For individuals approaching major life stages—like buying a home, saving for retirement, or navigating debt—expert guidance can be invaluable. With tailored strategies built around your unique situation, you’re positioning yourself to make consistent progress toward your financial goals.

3. Buying in bulk

Paying more upfront to purchase items in bulk might feel like spending extra, but it offers significant long-term savings. Items like non-perishables, toiletries, and even business supplies can cost 10-30% less when purchased in bulk. These savings can open up funds for other financial opportunities.

Warehouse memberships, such as Costco or Sam’s Club, are great examples. While they require a yearly fee, you get access to discounted prices that pay for themselves within a few shopping trips. Think of it as stocking your pantry and your wallet.

4. Investing in quality household items

Sometimes, spending extra on high-quality items ends up saving you money. Take cookware, appliances, or mattresses—cheap alternatives often break down faster, leading to frequent replacements. Spending on durable, efficient products upfront ensures you get your money’s worth over time.

For example, a reliable energy-efficient washing machine might cost $200 more than a basic one but could reduce your utility bills by $50 annually. Over time, these little savings add up, proving that quality is an investment, not an expense.

5. Invest in nice clothes

First impressions matter, especially in professional settings. Whether pitching to investors, attending interviews, or networking at conferences, dressing the part can make a world of difference. High-quality, well-fitted clothing shows you’re serious and confident, which can leave a lasting impression.

While brands might tempt some to overspend, focus on classic pieces that deliver the best return. Think of tailored suits, versatile work blazers, or classic shoes—these can last for years and pay dividends in the form of new opportunities.

6. Investing in your business

For entrepreneurs, strategic spending on your business is an investment in its future. That could mean setting aside funds for marketing to attract customers, purchasing software that streamlines operations, or even hiring part-time help.

For example, many small business owners see exponential returns by spending on targeted campaigns, like Facebook or Google ads, to reach new audiences. Instead of viewing business expenses as a sunk cost, think of them as water for growing your money tree.

7. Flipping items to make a profit

Flipping involves purchasing undervalued items and reselling them for more. Whether it’s furniture, vintage clothing, or even cars, this method requires some upfront spending but offers the opportunity for fast returns. Many people are turning to platforms like eBay, Facebook Marketplace, and Depop to start making extra cash.

For instance, someone might refurbish a $50 used coffee table they found online and resell it for $200 after adding a fresh coat of paint. This side hustle, while requiring a bit of elbow grease, is a prime example of spending money to attract returns.

8. Redecorating or deep cleaning your house for a roommate or Airbnb

Your home can be more than a living space; it can become a source of income. Spending money on deep cleaning or slight improvements—like repainting, rearranging furniture, or installing updated lighting—can increase your home’s appeal for renters or Airbnb guests.

Even minor investments, like purchasing new sheets or tasteful wall art, often lead to higher nightly rates and better reviews. Whether hosting an occasional guest or seeking a long-term roommate, these upfront costs can quickly pay for themselves.

9. Getting your car detailed to start a ride-sharing side hustle

Your car can be transformed into a money-making asset through services like Uber or Lyft. But to attract higher ratings and better tips, travelers expect clean, comfortable rides. Spending money upfront on detailing, maintenance, and maybe even a ride-share insurance policy can significantly boost your earnings.

Additionally, keeping your car in top shape prevents expensive problems down the road. Treat your vehicle like a business asset—an initial expense that funds ongoing income.

10. Starting a blog

Starting a blog is a surprisingly low-cost way to create a long-term income stream. A simple initial investment goes toward hosting, a domain name, and basic website design. With some time and effort, you can begin monetizing through ads, affiliate links, or selling services and products.

Best of all? Blogging gives you flexibility. If you choose a niche you’re passionate about—like cooking, personal finance, or travel—it won’t even feel like work. A blog starts small but can snowball into passive income if nurtured properly.

Conclusion

Spending money to make money isn’t an absolute rule—it’s about making intentional, value-driven decisions that lead to measurable growth. Smart spending aligns with clear goals and focuses on areas like marketing, skill-building, team development, and innovation. Reckless expenditures, however, can drain resources without meaningful returns.

Every dollar you spend should act as a step toward a bigger outcome. Whether it’s marketing that builds your audience or investing in tools that improve efficiency, the key is strategy. Evaluate your options, track your ROI, and adjust as needed.

The real power of money lies in how you use it. Are you spending for immediate gratification or investing in future opportunities? The choice will shape your success. Now, it’s your turn—where will your next dollar go?